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Washington’s Proposed Income Tax Will Stifle Economic Growth

Washington State is often listed as one of the best places to live, retire and open a business. Home to some of the fastest-growing industries in the nation, Washington was ranked by Forbes as the second best state for businesses in 2009. Furthermore, Washington was recently featured on U.S News and Reports’ list of the five best states to build a nest egg. But all that could change soon.

Washington’s absence of an income tax is a large selling point that has attracted a great deal of entrepreneurs and productive citizens to the state. Many of these successful residents have migrated from states with high income tax burdens. However, there is a statewide proposition, Initiative 1098, on the November ballot that would impose a 5 percent income tax on individuals earning over $200,000 or $400,000 for married couples. Any individual making over $500,000 or couple earning $1,000,000 will be forced to pay an additional four percent surcharge.

If passed, Washington would suddenly go from having no income tax to imposing the eighth highest rate in the country. After two years, the law would allow the legislature to extend the income tax to nearly all residents. Keep in mind that the federal income tax once only applied to the rich. Today, the federal income tax is levied on Americans of all incomes. As we’ve seen from other states that have adopted income taxes in the past few decades, these tax hikes will crumble the economy.

In fact, states with no income taxes have far more job growth and economic gains than those with income taxes—especially those with high income tax rates. According to the American Legislative Exchange Council, the nine states without income taxes had an average job growth of 18.2 percent over the past decade. Conversely, the nine states that have a high income tax rate experienced a mere 8.4 percent rise in jobs. Income taxes discourage work and investment while infringing on individual liberty.

In various ways, the wealthy residents are the most responsive to shifting tax rates. Unlike the rest of us, the rich are likely to own more than one house. If Washington introduces a steep income tax, many wealthy residents will simply pack up and leave or at least file taxes in a different state. That’s exactly what happened in Maryland. Governor Martin O’Malley raised income tax levels on wealthy households to 6.25 percent from 4.75 percent in 2008. In the end, Maryland’s millionaire income tax back fired. It is estimated that Maryland lost $1 billion because one-third of its wealthy residents moved or filed their taxes in other states with lower tax burdens.

Washington should learn from other states’ mistakes. Simply, soak-the-rich policies have never worked in anyone’s favor. Washington’s proposed income tax will also encourage job-creating businesses to go elsewhere to escape high taxes. As an unintended consequence, all of the 11 states that have introduced income taxes within the past 50 years have seen their share of U.S output decline.

Unfortunately, a few prominent billionaires are supportive of tax hikes on the rich. Notably, wealthy lawyer Bill Gates Sr. states that “rich people aren’t paying enough.” He has personally contributed $500,000 to promote Initiative 1098 to force citizens in Washington to surrender more of their hard-earned money to their government.

Bill Gates Sr. should live and lead by example. As economist Mark Skousen said “the triumph of persuasion over force is the sign of a civilized society.” If Bill Gates Sr. strongly believes that the rich do not pay enough in taxes, he should cut a check to the Washington State Government and peacefully encourage others to do the same. However, he has chosen to use the power of the government to coerce others to pay more money against their will.

If passed, the new income tax may deter Americans from investing in Washington. Punishing the rich through higher taxes will ultimately hurt everyone in the state. If you want less of something, you tax it. Why would Washingtonians want less income? By forcing productive citizens to turn over nine percent of their investments to the state government, countless jobs will be destroyed or never created.

Instead, state residents should be free to spend or donate their hard-earned money in anyway that they desire. After all, individuals in the private sector spend their money in a more efficient manner than government bureaucrats. Washingtonians who want more jobs and economic growth will vote against Initiative 1098 to preserve the state’s competitive income tax rate of zero.

Personal Freedom and Prosperity 101: Personal PowerThe distinctive principle of Western social philosophy is individualism.It aims at the creation of a sphere in which the individual is free to think, to choose, and to act without being restrained by the interference of the social apparatus of coercion and oppression, the State. All the spiritual and material achievements of Western civilization were the result of the operation of this idea of liberty. —Ludwig von Mises

Joe Remenar found the ideal spot to retire. After a long career in law enforcement, he bought three and a half acres near Blaine, Wash., which included a nice home and a little room to enjoy nature.Just a few miles from picturesque Semiahmoo Bay and even closer to the Canadian border, the Pacific Northwest property seemed the perfect fit. "The family really fell in love with the place, as I did,” Remenar said.

Hallie Kuperman loves to dance. But what she loves even more is sharing this passion with visitors to her social dancing club, the Century Ballroom.Hallie purchased the vintage dancing space 16 years ago, turning it into a Seattle institution. The Century Ballroom not only teaches swing, tango and the foxtrot, it also hosts cabarets and other live performances for an eclectic crowd of all ages. The club’s trendsetting owner has become a prominent and beloved figure in the community.

Barack Obama has yet again taken credit away from individual success and attributed it to the government, sending small business owners one simple message: “If you’ve got a business, you didn’t build that. Somebody else made that happen.” If this doesn’t further prove that Obama is unfit to lead a country based on the splendor of a free market system, then I’m at a loss as to what will.

Obama seems to have one goal in mind this election: creating an even greater gap between Republicans and Democrats. I must admit, he’s doing a great job of it, stoking class warfare and feeding the media and his supporters left-wing lies. Did you hear the GOP is nothing but a bunch of wealthy and corrupt people that have no interest in the good of the lower and middle class citizens?

During the nasty back-and-forth in the debt ceiling debate, inflamed rhetoric dominated discourse, and left reasonable debate trailing in the dust. Any opposition to a multi-billion dollar tax increase is seen as the artifact of a radical faction of Congress.

On Tuesday, Census Bureau director Robert Groves announced the first results of the 2010 Census. The findings were not so surprising. Due to population changes, 12 House seats will shift. States with low or no income tax gained more representative seats in the House. Those states with a high income tax lost seats.

Democracy and Power 107: Counting votesSuccessful … politicians are insecure and intimidated men. They advance politically only as they placate, appease, bribe, seduce, bamboozle or otherwise manage to manipulate the demanding and threatening elements in their constituencies. – Walter Lippmann (1889-1974), American Journalist and Author